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What Does It Mean to Be in the Red?

The phrase “in the red” is used to denote the fact that a business or an individual is losing money or showing a deficit. It is technically a term used in the field of accounting, but one will hear this phrase being used in daily conversation as well. The term “in the red” may be used to refer to the overall operations of a business, but it may also be used to refer to specific endeavors, such as projects.

Where does this expression originate from? It really is very simple, actually. The color red has traditionally been used to denote numbers which are negative. In a balance sheet or financial report, numbers that are colored red indicate losses. This is opposed to numbers which are colored black, which are profits. While it started out as a slang phrase, it is not considered business jargon as well.

For individuals, a specific example of being in the red is when he or she has more expenses than the money coming in. Let’s say a person earns $2000 per month. If he or she has to spend $500 on rent, $500 on bills, $500 on loan payments, and $600 on other purchases, then that person is in the red.

Today, there is a plethora of accounting software that makes it easy to track cash flow. These programs come in various formats, both for business and personal use. Not all of them use the color notation anymore, but the phrase still is still applicable.

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